(March 6, 2019 – INDIANAPOLIS, Ind.) A report commissioned by the Indiana Fiscal Policy Institute (IFPI) finds that Indiana’s counties, cities and towns are spending at 2002 levels (per capita, 2015 dollars), well below the average budgets of local governments across the nation.  State policies over the last forty years have reduced reliance on property taxes while introducing the uncertainty of tax caps and volatility of income tax revenues.

But with budgets already downsized over the last decade – while the economy recovered from the Great Recession – the study’s authors ask: Can local governments keep up with public safety commitments, infrastructure demands and debt obligations when a future recession takes a toll on Hoosier paychecks and income tax collections?

“A Fiscal History of Indiana Local Government,” by Professors Craig Johnson and Justin Ross of Indiana University’s School of Public & Environmental Affairs, looks at how state and local governments have swapped responsibilities and restructured revenues since the ‘Bowen tax package’ began replacing property taxes with state sales taxes to support education, through the last decade of property tax caps and declining revenues.

“Indiana has given more predictable property tax bills to homeowners, farmers and employers, in exchange for a less predictable fiscal outlook for local government,” said IFPI president Chris Watts.  “While much of the public sector has rebuilt budgets since the Great Recession, local government in Indiana has continued to cut in response to property tax caps and the annual uncertainty of ‘circuit breaker’ shortfalls.” 

Read the full press release here.

Read our last General Assembly update here.